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tv   Squawk on the Street  CNBC  March 3, 2015 9:00am-11:01am EST

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history. i think people don't know enough about our history and you can be a good citizen if you don't know enough about the history of our country. >> thank you for coming. >> my pleasure. >> join us tomorrow. "squawk on the street" begins right now. ♪ move on up move on up♪ >> good tuesday morning. welcome to "squawk on the street." i'm carl quintanilla with jim cramer, david faber at new york stock exchange. we've good nasdaq 5000 now what? premarket soft here as we await auto sales which so far aren't too great. got downgrades of retail names as well. oil around 50 again. "the journal" saying gas savings are being saved, not spent. ten-year, look at this zoomed to 2.10 a shade above. yellen does speak tone. road map begins with the markets. major milestone for the nasdaq crossing 5kfor the first time in a decade. today, the dow and the s&p
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looking for record territory of their own. shares of best buy set for a nice gain after earnings ahead of estimates. we'll tell you why it's still about the tablets. strong demand for jeep brand helping sales at fiat chrysler. what to expect from ford and gm when they report later on this morning. you saw it happen here on "squawk on the street" during yesterday's session. the nasdaq hit 5000 for the first time in 15 years. the index finishing above that level. now about 40 points away from its record close. meantime, the dow and the s&p each posting all-time closing highs, along with the russell. as you might expect jim, broad media all over it. the nasdaq 5000 logo, bleeding into the mast head over at usa today. >> interesting, i think they don't have -- i think that most people would know kim kardashian far better than what stocks are doing on the nasdaq. last time the man on the street new it was time to buy cmgi.
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>> they didn't know it was time to sell cmgi. >> priceline did come public this day in 1999. a lot of stocks on peep'sly. s. those days could people know palo alto? would they know nxpi? they know apple. i thought yesterday was amazing for the big cap rally. extraordinary. there was just money flowing into s&p. and the semiconductors given the fact na nxpi where we had the ceo, did a great job, ignited the group, sky works solutions. so i -- look, everyone's saying it's different this time. last -- this is when you began to have money go out of the nasdaq into the s&p. you saw the turn literally, in the next week back then. >> back then. >> you started seeing it. >> 15 years ago. >> money going into coke come
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cola and lilly. >> mcdonald's. >> i'd say that that was a mark that was bifurcated. you had the -- look there were stocks like microsoft part of the s&p and nasdaq. >> and cisco as well. >> cisco. >> it's funny, incredible market highs in terms of their capitalization that they haven't seen. >> 200, 300 times earningsen when you speak to ceos i don't mean -- i'm not slamming usa today, i'm saying that's great they're bringing it together. there's a fabulous list in usa today. >> leaders. >> back then chambers gates, ellison, fiorina. today, your point, do people know nadella? do they know benny off, costello. >> how they cannot know benioff is incredible. maybe they know -- chambers mild-mannered. it's interesting he's the survivor, right? >> right. >> ellison, they know but know
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him more because of yachting. >> yeah. >> but people know who mark zuckerberg is. >> that's for certain. >> they may know who jack ma is. they know who jeff bezos is. >> good point. >> they're not viewed -- >> those guys who are founders like ellison. >> we had clips from two children that ran google at the time, right. >> yes. >> middle school cohort is so on fire. >> amazing. >> larger point, broader ownership of stocks taking place 15 20 years ago have not been replicated. perhaps we lost a generation of investors and that's reflected in what we've seen not to mention lives of etfs, don't have that broad-based participation. >> that is -- i watched coverage, but you're the only one pointing that out. we did -- people say, no we didn't lose a generation. >> we did with the bust from dotcom followed up by the financial crisis. i think it's fair to say we did. >> one of the phrases you see in
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the advertisements for etfs, eliminate single stock risk. at the time in 1999 2000 it was eliminate s&p risk. you want single stock risk. >> the hope is that peep at least been exposed to the stock market over the last six years. we are up almost six years ago from 660 on the s&p, as well. >> friday. >> friday anniversary. >> right. you have a lot of dechbifferent cross currents. i come back to people in general don't talk about the stock market. look, talking about the stock market, people stop me on the street,. >> top ten nasdaq names 32% of the index looking for revenue growth of about 13% this year. you're not going to get that on the s&p, jim, right? converge x today nice note nasdaq has the scarest of commodities now and that is growth. >> it is amazing. >> what you're willing to pay for it is a different story. >> cisco's an oddity. my charitable trust owns. how can it be 16 times earnings?
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are we hearing palo alto? taking business from cisco, maybe that's an earn. apple selling 15 times earnings. if the watch is big, apple will be a bigger bargain. yesterday an article in one of the papers no one wants the watch. i'm thinking no one wanted the tablet. no one wanted the ipod. no one wanted anything. >> speaking of tablets, maybe we should look at best buy, fourth quarter operating profit 1.48 the beat. revenue shy of consensus. comps up 2. electronic dhan achain announcing a one-time dividend of 50 cents. five times earnings release, tablet weakness saying across the industry the category down by a third in the quarter. >> yeah. and i know that apple's got a refresh coming. what's interesting is that if you go over the intel conference call that was like the peak of intel, because they didn't -- they're talking about tablets, phablets but it's not working. microsoft is going to miss the numbers, i really do. i think microsoft can't do the numbers.
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i think intel can't do the numbers because tablet and pcs were weak. that was my takeaway from best buy, wow, whoever's in the surface, surfaces not -- >> dive dive dive. >> but wait explore your concern about microsoft and why. >> i just think that in the en, when i listened to hewlett-packard last week, which i regarded as a discouraging moment, i cannot feel good about microsoft and intel after that hewlett-packard. >> discouraged by hewlett-packard beyond just their inability to cope with obviously a strong dollar? >> well i think that microsoft, no one really -- i think that microsoft -- no one really seems to be enthused by new products. numbers are high, microsoft. i don't know, rick sherlin, i don't think they can make the number. i think nadella is paralyzed here. they were doing well and stalled with xbox.
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ex x box is strong. i'm concerned, merrill starts western digital and seagate with sells. this is pc-related versus nxpi. what is that? your wallet, that's your auto. those are insect secular increase. as it relates to best buy, they managed to get margins up and sales up. >> good job. >> feel comfortable enough with some capital distribution right? stability? >> congratulations to them. >> generating cash. returning cash to shareholders. >> i asked you whether i felt that whether the bubble would happen. a couple of articles, both in "wall street journal" and "new york times," the consumer isn't spending. it's the consumer minus -- who is 45,000 and below is spending but the best buy number made me think go pack to charlie scharf find out what these big credit card companies, whether seeing the binge. >> you said last week it was an important number at best buy to
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gauge the consumer. give me your -- >> positive. >> positive? >> just positive. >> good number. >> just a really good number. i just was gratified. i think that they're -- they've made a big comeback. hand it to them. >> comps were -- easy comp. >> true. >> true. >> back then when margins, remember, down 200 basis points that quarter? >> but they make a lot of money. it's interesting that this is again, you know the -- amazon isn't the only game in town. do i want to buy best buy? obviously should have bought best buy last week but i point out they are doing better than people thought. it's interesting, because like, you know we went to buy a smash burger the other day, i thought it was a game stop. looked just like it. almost went in there. that's how game stop's fooling people. looking like splash burgers. game stop's the other guy. if they get people in it's really the spendathon is on. digital has been kind of game
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stop versus digital. >> yes. >> speaking of spending. >> familiar with what you're talking about. my xbox says hello when i walk in the room. >> my xbox could care less about me. >> we care. >> do you. >> the other day it said sorry. i don't know why it said sorry. i never play it i walk by it it said sorry. >> sorry about microsoft's performance. apologizing for the stock, why not? >> fiat chrysler u.s. auto sales up 5.6, helped by strong demand for jeep but results below forecast. gm due out later this hour europe okay up 7 in germany, france, spain, italy good. >> europe retail germany retail sales incredible. the green chutes are no longer green chutes. it's like tulips but not bubble tulips some much good out of europe. i know that you could say, wait a second how about this you can pick a country that's not doing -- france retail sales
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are good. pmi out of the uk wow! >> yep. >> versus say china, baltic freight up again, but miniscule. europe is going to be a tailwind this quarter. no one believes that. i'm telling you it will be. >> what about worries -- hearing this related to jobs this friday -- hearing it related to retail, that it was so cold in february, that people didn't shop. >> silly. >> didn't shop at car lots. >> i think that's true. too cold. the foot traffic, people are kind of -- they're hunkering down. maybe it's an -- amazon by the way, could be benefit for them. yeah i think foot traffic was not good. it's too cold. >> coupled with the ports, that's one reason why goldman is sour on specialty retail. the drivers of a tactically bull bullish view on specialty a slam. >> pvh -- i don't like tina power but that was saying the run is over. and i want to be careful because when the weather gets better
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people will come out of hibernation. i don't know -- around the country, the weather's bad. you walk outside and say, i want to get back inside. >> so tired of that. >> aren't you? >> very tired. xbox apologizing for the weather. >> i'll explore why my xbox says. >> i want to see if siri says sorry to me. >> citi striking multibillion dollar deal, wall street upgrade. palo alto network ceo's company's on the front line battling cyberthreats later in the morning. another look at futures, as we try to see what comes after nasdaq 5000. more "squawk on the street" from post 9 at the nyse when we return.
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♪ ♪ citi group taking a major step in its plan to unload unwanted assets agreeing to sell one main financial unit for 4.25 billion in cash making spring leaf the nation's biggest subprime lender. jpmorgan upgrading citi from overweight to neutral, citing the credit card deal with costco expect capital returns to be approved in 2015 jim, and hit operating efficiency targets. >> making a lot of moves.
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i think these are moves that are long overdone they had to do a lot of things. i think corbat's done a very good job. a lot of people are recognizing that the guy's become very don't you look askance at me. >> i feel like you saying he wasn't doing a great job. maybe i'm mismembering. >> no. he's been gaining -- as he got in, what i realized was the situation was not in hand. as he's gotten control of the bank, he's recognized where the fat is he's cut a lot of the overseas divisions, the mexican problem wasn't he he inherited that and he's being very forward looking. also been up front with the government and tried to put that behind him. spring leaf deal people will say leaf got the best of it but any more capital, citi will do fine in c car. i was hesitant this bank is in trouble. this guy's -- he's made major changes. >> so i like to hear when you change your mind. i just like to understand -- i
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know there's a lot that goes into that -- >> no absolutely right. have i worked behind the scenes to try to understand the situation better? yes. do i feel strongly that corbat is the man for the job? i wasn't sure initially. i'm definitely sure now. >> you are in. >> making a lot of good moves. >> okay. >> he turned down the nfl, you know that? >> yeah. >> for what role? >> to be a banker. pretty compelling. >> ten-year at 2.10 -- >> franchising corbat. >> you're franchising nasdaq 5000. >> i'm franchising a lot of things. >> a lot going on. >> only allowed to franchise one thing. >> bar san miguel too. >> no. >> officially on twitter . >> thank you. no, i feel better about corbat and better and better. i think the last -- there was a filing that came late for the government it looked like he had hidden something. he hadn't hidden anything. >> it didn't look good right. >> that was a last-ment call from washington. i think corbat's doing a fine
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job. >> continuing to be larger issues in terms of the complexity of the large financial institutions that you hear. it's not just applied to citi. certainly jpmorgan gets that a great deal. >> how about kiss this morning for jpmorgan about how the consumer bank is -- >> i did. outdoing "the new york times" story. their way to tell us mr. smith i guess the heir apparent. >> mr. smith doesn't go to washington is the way i call that. >> no. >> they don't are have to worry about washington. everybody's trying to put washington behind them. >> citi's going to be close to its highest levels of the year. >> almost back to -- >> it's just -- talk about stocks that have killed people. talk about nasdaq. citi was not good. but i like the changes. and, yes, i changed my mind. the facts changed. i changed my mind with them. what do you do sir? >> i do the same. i swear. yes, i know. i know. >> i'm not -- if my father were alive he'd call me after the
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show and say, are you and david feuding? what is that? no, i love david. he goes no i think you're feuding. no, dad, i'm not feuding. >> fiat chrysler auto sales. it's time for ford. phil lebeau has that. >> we can expect february numbers generally speaking for the industry, to be considered lackluster. ford numbers for february sales dropping 1.9%. that is well below the ed month's.com estimate offen crease of 5.2%. looking through the release, no mention about weather. we saw nissan in the last half hour report weaker than expected sales numbers and blamed the storms in northeast as well as the southeast towards the end of the month. i think that's a theme that we hear. generally speaking, we're going to see lower than exed. sales numbers and i think the sar for the month on what we've seen so far, closer to 16.3 16.4 million compared to the estimate of 16.7 million. guys if there's one piece of good news about sales being weak
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in february it is the weakest sales month of the year for the industry. so you can withstand it this month. but it is going to take a bit of the bloom off the rose for the industry. >> thank you, phil. >> cold weather. >> yeah that's affected -- phil, you've got -- people are not going out, phil they're justify not. >> not denying that especially the northeast, no doubt. it's estimated it took about half of the did 60% of sale off of some markets in northeast. no doubt it did have an impact there. >> i tell you one thing, one thing to go to the mall when there's a lot of snow. another thing to take a test drive in new f-150. >> tesla, cold in china. sold what ten cars? >> there's a lot of -- you can say anything about tesla. it's athird rail. but phil lebeau says there's some weather, phil knows more. i have to tell you, i think -- >> the auto industry look to phil for the information. and not vice versa. >> we'll get cramer's "mad dash"
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as we count down to the opening bell this tuesday. one more look at futures. you can see why the premarket is soft. back in a minute. ameriprise asked people a simple question: in retirement, will you have enough money to live life on your terms? i sure hope so. with healthcare costs, who knows. umm... everyone has retirement questions. so ameriprise created the exclusive confident retirement approach. now you and your ameripise advisor.... can get the real answers you need. start building your confident retirement today.
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♪ 6:30 before the opening bell. time for "mad dash" on tuesday. starting in the energy patch. >> yes. seeing a lot of refinancing, a lot of equity deals. and laredo pete a lot one left
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for dead. if you think that this is a mistake, look at concho 108 last week priced 6 million shares and it's at 113.92. up 5 yesterday. people are buying secondaries and feeling good about them because oil companies are no longer in trouble, once the deal's done. >> i'm starting to wonder whether the distress we saw coming is not going to be quite as distressful as might have been anticipated, given equity offerings and ability to do high yield as well. you have to have a decent story to tell. >> yes. >> but a lot of money rushed in the idea that everything's going to get distressed and perhaps it won't. >> talking about a lot of guys ready, blackstone's ready. i've got to tell you, companies are ready. and deals are being lapped up. people think we've seen a bottom. i felt 42, 43 was the bottom.
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concho was the home runnen it's high quality. permian. laredo, not fair to put them in the same breath. do you lick your floors. >> do i lick them? not often. >> you're okay with lumber liquidators. >> yes. >> calling a bottom, lumber liquidators, enough already. it's overdone. now, i've got it tell you, it's about installation. if you ain't stall it if tilson is right, and calls this the nexus asbestos it's not a bottom. if you go back to food lien in 1992, when abc prime time came and savaged them you know the sales went down big. so i don't know. if the sales go down big, 60 minutes is a watched program, you don't want to bottom fish lumber liquidators but the flooring issue, if they attack the media, if that -- if they attack short sellers, that didn't work for food lion. >> never a good sign. >> no. >> attack the facts, as they are
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presented, if incorrect. >> if the facts change you change, too. >> yes. you do. got to get that line right. a lot more things to cover. maybe some other lions as well from famous movies or plays. coming back after this.
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you're watching cnbc "squawk on the street." live from the financial capital of the world. the opening bell in about 60 seconds. premarket's a little bit weak. downgrades of retail names, auto sales have not been that hot for february. best buy seeing negative things about tablet sales in general, although we are getting an upgrade, rare upgrade, of mcd. >> yes, that is important. i think people have to recognize that this is a momentum name and people feel there's going to change than was bank of america earlier i misspoke. this is an important, important, important number with mcdonald's. as you know if they get franchises going, wow. >> they reiterate buy over b of a, raised target to 112 from 100. we have the franchise meeting this week in vegas. it did hit 100 yesterday for the
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first time since july. the big money. >> charitable trust sold it too soon. i felt the change was going to come and you got the quick gain. >> there's the opening bell. a look at s&p at the top of the screen. at the big board, dine equity celebrating ihop's tenth annual national pancake day. serving pancakes here. >> i have it tell you, a remarkable turn. this company's on fire and the julia stewart's the reason model's good fixing the balance sheet. i had the bottle tolessomless pot. >> over at nas dak, operator of lane bryant dress barn justice. >> private equity activist name. saw the activist from the deal buzzing about maybe that going
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to be part of it some sort of private equity thing. hard to come by. i don't want to say they're happening. >> we've gotten chrysler and ford. time for gm numbers. phil lebeau's got that. >> we finally have a company beating the estimate in terms of february sales. general motors increasing sales 4.2% better than the edmonds.com estimate. overall numbers from auto industry, i call them lackluster, in terms of what we expected from the auto industry. but one thing is clear, what is selling, suvs, crossovers and pickup trucks. big sales last month for gm especially talk about the new colorado. back to you. >> phil lebeau, thank you. gm. >> interesting, gm warren buffett, praising mary barra yesterday. >> the question, will they, how much will they return capital to shareholders? giving 2.1% of shareholders making noises that they want a larger return. >> i think also you mentioned
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yesterday, warren buffett not that happy with the way that they want to put people on the board. >> right. which is an issue we've discussed a great deal. stock not doing much of anything on those numbers. >> caught up in it. caught up in the general my asthma. >> autozone talked about depot, pipes busted over the winter go to depot. autozone beats by 60 cents. that's the top s&p gainer. >> the most aggressive buyback of any company in the new york stock exchangen typically done numbers in the last six quarters peep didn't like. not this time. that stock, by the way, up 18 -- it's going to sound nutty -- you should still buy it. >> comp's up 3.6. >> stock's not done. >> a pothole story? >> very well-run company. people go into the zone go into the zone of the stock which is going to take out, i think, 700. wry now it's a sign of the devil, don't worry, don't be put off by that. >> followed by gap, number two
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gainer. outperform. gap would have a breakout year. >> they figure if they get the gap stores right -- we talked about denim being hot. they're a denim place. not an expensive stock. the new ceo has a sense of urgency. people -- that's the right level of price for people on gasoline. good idea. it's a good idea. i'm with it. >> we haven't touched on apple yet. piper does do a deep dive on the watch. they think average selling price could be more than 500. maybe 550, maybe 600 with additional bands. >> fossil watch it tells you nothing, it's fossilized. apple watch might give you a lot of data about yourself and wave it by a cup of coffee. >> for everybody in the starbucks, if it doesn't work properly. >> get one for bar san miguels, drinks all over. >> yesterday domino's working on an app, order a pizza from your pebble. >> i think it's incredible how
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patty doyle's the most technologically savvy company. julia stewart from dine equity most social media. >> ipads on all tables remember that in. >> total game. people just don't understand this turn how -- one point people were worried because of the balance sheet. she's fixed the balance sheet, she's fixed the menu. guys it's good tasting. >> what is the driving force behind why i'm going to want to get an iwatch? what is the -- >> the apps are going to be so compelling you'll find yourself looking, you know you'll just have your kids on it you know boom like my kid, that's the new samsung, by the way. >> i keep this in my pocket. it's easy to take out, put in take out put in. it does things too. >> like what -- >> i can make phone calls. >> maybe a fitbit application. weight watchers look at the stock. >> this things that too.
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tell me how many stairs i walked. >> you won't buy one. >> i'm curious. i'm wondering whether or not this is going to be something that is compelling other than the -- what is a large audience of people who have to have the latest thing. >> i'm going to get one. price elasticity is you know infinite. >> this cost me a fortune. i wore it once in the caribbean. it stopped dead time stopped. i will take this and throw this against that if the apple iwatch does -- >> karl's going to get one because these -- >> i'll griv youive you mine. take that. >> i'm not stupid. you gave it to me. >> give that back to me. >> piper sees 8 million units this calendar year. street's at 14. if they're light on units, can they make it up if the margins are fatter on a higher isp? >> no. they can't be light on units then have to dazzle. i think they will. look, who knew that all of the
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credit card companies in jpmorgan had gotten behind apple pay? we don't know what they have. >> we don't. apple pay makes perfect sense to me. as a business proposition, it's something that will -- >> the blood pressure app. i need an app that signals something's going to happen in my body. i want it to be a maintenance light. >> aren't you better off swallowing a tiny chip to monitor all of those things. >> we love this one. give me that chip. i'll swallow it in a second. i'll have it embedded here. >> rolling around in your bloodstream. >> like the running man. >> jim, now, you're going to get the watch, clearly. >> yeah. >> does that mean you are with opi at 155 with with morgan stanley at 160, 190 on a bull case. >> as soon as it goes to a market multiple which still got a little while. if you like that. >> it's nice. >> right? >> these are the guys who should be worried. >> exactly.
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>> fossil's already worried. this is the kind of thing where i will replace it. it's not that useful. do i care at this point if it's a chick magnet or not? it ain't. that's a phrase that my nephew uses. i don't use that phrase. >> before we move on alibaba down another 1.50 bowelow i believe opening print on the ipo day. i want to make sure i'm right on that, i may not be. i've watched the stock decline from 120 to what we're talking about now, what 82.50. >> getting stories. >> yeah there's definitely been a number of stories. the latest being about what goes on on the selling websites tmall, over in china, in particular. what may be -- >> whether or not all of the clicks are -- >> yes. >> a story that has lost its -- >> whether false clicker to
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generate momentum. >> it's not an expenseive stock. china's had a big down thompsonturn since then numbers are not coming through china. for any part of china. i think electrolux said they had a down quarter in china. big washer/dryer company. china's not a good story. did you see the mccau numbers? >> are rich people -- are they having a crisis over there. >> they are trying to desperately to crack down on corruption, though society was somewhat lawless. >> are they going communist? >> i don't know what they're going. >> cracking down on johnie walker blue. >> lawlessness in the country they're trying to get a handle on. >> the watch industry. remember, not a lot of the big apartments, they want to show in havewell, they smoke a lot of cigarettes, they cut back on that. this chinese story is something to watch. it's not -- it's not the driver.
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it's not the driver of this world economy right now. >> no, no. right now, dow's down 36 points. mary thompson's on the floor. >> stocks hesitating after yesterday's record setting session for the dow and s&p 500. closing above the 5000 mark in 15 years. we seen a nice run over the last six weeks some the market might be getting a little bit stretched here. also investors concerned, in part because earnings haven't been as strong as many hoped and wonder whether or not the markets can continue to extend their gains on that. of course, offsetting that there aren't a lot of places to put their money. investors putting money, goal and oil getting a bid on a weaker dollar. but the stock market under pressure. let's take a look at transports. of course, right before the opening bell we did receive news from delta that its revenue, passenger revenue declined in the last month, pa
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part weakness in the dollar and concerns about the winter or impact from the winter storms. take a look at airlines they are mixed. delta taking the biggest hit, down 1%. citi group in the news. bank saying it's sole its one main unit to spring leaf expected 4.25 billion to create one of the largest subprime lenders in the u.s. all of this coming ahead of thursday's results of the stress test. keep in mind this comes after the market close on thursday. the big banks, of course federal reserve, releasing results of those stress tests. it's key for citi because last year they failed. you can see banks getting a bid in early trading. energy stocks also under watch today. we are seeing higher oil prices slightly ahead of the inventory data tomorrow. later this afternoon, noble energy -- nabors weaker than expected results but did see an improvement over a quarter. stock up 8/3 of a percent.
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>> mary, let me take you down to washington, d.c. eamon javers with breaking news latest on the saga regarding the department of homeland security. >> so much back and forth on this issue. according to a source in the rooms, john boehner's saying that he's prepared to move what's called a clean dhs funding bill. a bill without conditions. this is the end, now, of a long back and forth battle over whether or not republicans would be able to strip out some of the president's spending measures for his immigration initiative. that outraged a lot of republicans who felt the president was acting beyond his authority, lawfully the president obviously argued the opposite way. they held up dhs funding bill in that fight. now, though however, speaker of the house john boehner saying he doesn't have enough support on the senate side of the capitol to get the job done. republicans wary of getting the political blame for shutting down funding for the department of homeland. so many threats coming from
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abroad and domestically. this would appear to be the end of the battle. john boehner saying he's going to move a clean dhs funding bill. >> we'll watch that with the netanyahu speech coming on later this morning. >> want to move on this morning to fixed income if we will or if we can. we mention actavis a loot. selling lots of stock and convertible convertible. today selling a lot of bonds. each time the company seeks to access the capital markets, whether it be on the fixed income side or the equity side of the ledger they do so very favorably. and no change there today. in fact, for a $20 billion offering talking about demand that was 95 billion, it just gives you a sense as to what is going on and continues to in the fixed income markets, as investors are starve ford yield. you've heard and t. so many
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times, but it continues to be true. the average yield on all of the different duration paper that actavis is putting out there whether 18 months to 30 years average it's going to pay, 3.5%. >> 3.5? >> used to be worried about treasuryies treasuries. >> 3.5%. a triple b, triple b. >> you've got to be kidding! >> no i'm not kidding. dead serious. >> paying with s&h green stamps. >> 3.5% average yield for triple b. man, it's a great time to borrow. this is a company that generates a lot of free cash flow high cash flow conversion rates. it will bring leverage down quickly. the triple b will become a better rating and that will help the bonds, as they mature as well. but the bigger picture is there's simply -- there were seven accounts sources tell me
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that were in for over 3 billion. >> david. >> seven accounts skrould taken up the entire deal. >> this is bad. >> why? >> we talk about the nasdaq 5000 7000. bubble -- the bubble is what you just mentioned. this is not the bubble. >> spreads over treasuries still not as -- still not as low as they've ever been. >> b, b, b. >> triple b paper. >> when your kids come home with "b," how do you feel? >> not so good. i hooeldyield paper, trading with a 4 in front of it much of it with a 5 in front of it meaning companies are paying very low rates on what they're borrowing and that includes we talked earlier on the equity side when yim, talk jim, talking "mad dash," trying to access high yield. shaneer, not confused with other names $2 billion deal.
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one of your favorites, moving away from it, sirerius, 5% money. >> for a company we felt but was going to go bankrupt. >> remember that paper that john malone bought? 5% ten-year. >> i don't want to hear about qualcomm and cisco being the bubble. >> all right. >> are you telling me that actavis can get activists, they can get that right? in i were an actavis hedge fund can i float a bond for double b and take over for 5 million? >> i don't know. you have to have a balance sheet. the markets all markets love activists. >> the stock was good on the deal right? >> absolutely. rick santelli, you've been listening at all? what do you think? >> i absolutely have. i have to say, i respectfully disagree when all of the central
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banks are buying up all of the good paper. what eps what's left? a lost liquidity, many fully invested in stocks but it's the ride of the century, they're nervous the roller coaster's going to whip around more ep they're forced to go into issues like corporate because they're isn't a lot of great paper out there. this is the plan, the plan is to move into the riskier, quote, assets, anything outside of sov erns. if you want to buy better paper, spreads to narrow call up janet yellen divest of a couple of trillion of securities. >> going for that. absolutely, up big on the ten-year. you're so right, rick. i agree. >> continue rick. >> now, bond report. >> i like it. >> i tell you what this is of huge significance. granted if you look at two-day chart, by a nick we traded above
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yesterday's 2.10 high. today's high yield 2.11. open the chart up year-to-date settle at 2.17. on the 17th of february 2.17. high yield around 2.13, 2.14. the reason january of this year and last year were so similar because the only hedge to soft equities and they were last january, this january, is treasuries. let's see what happened yesterday? maybe 5,000 in the nasdaq. maybe records in all of the other indices. this slow creep, if we get above sentiment for the year everybody is offsides. pay attention. let's look at year-to-date bund. different chart. you see that one flattening, that's the ecb meeting. what a tight range it's been in. these are the wild cards. what's going to happen when the qe begins? markets are uncertain as to what was priced in on all of the big moves. leading up to the 22nd of january. let's get to fx.
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look at two-day dollar/yen, we closed about 207. you can see how important this level is psychologically. back to you. >> that was excellent. i think, again, good to be on the right side with rick. palo alto networks reported better than expected results after-hours yesterday, strong demand for cybersecurity product and services. take a look and think, that's wrong. the stock's up huge. mark mclaughin the president and ceo of palo alto networks. welcome to the show. >> thanks. >> you say it right up front at beginning of the call you say this means cybersecurity has attained status as a fundamental imperative for every company and organization in the world and that this paradigm shift is not abating. what does this mean for major corporations that have not upgraded, have not taken a palo alto-like approach? >> i think it's a couple of things are obvious. one what i was mentioning
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securities a fabric item everything in technology and decision making for risk. everybody has to pay attention to it and figure out what to do with it. and it's also very obvious right now that the legacy approaches are failing miserably. pick up the paper, it's failing left and right. what we're seeing is customers around the world saying there has to be something better next generation enterprise security platform which palo alto has and why we're doing so well. >> i get worried because if you're only doing a billion that means there must be a lot of institutions, banks, retailers not upgrading yet. >> i think that it's an evolutionary process. you can have a revolutionary technology but in the enterprise things tend to move slow. our journey's been a decade and it's got decades to go. we have 6% 7% market share, call it 93 94% of the world in
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front of us. we were r. seeing institutions upgrade to advanced security faster. >> you mentioned several times, three times that checkpoint cisco lost business to you. have you lost any business to checkpoint or cisco? >> not that i'm aware of. it's been consistent. as you can see from numbers using checkpoint or even cisco, any given quarter, growing five to eight times faster every quarter. it's obvious which way the market share's going. >> verticals, i hear retail banking who are companies that recognize that you know what we have not focused on this we've got to? i say that we know target home depot. i do not want to be with a provider who does not have yours or your palo alto security system. >> i think what we're seeing in our own business is that you noted we're well over $1 billion in sales now. but when we look at it on a vertical basis new york vertical represents more than 13% of our revenue. we're very well diversified in
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geographies and verticals what happen that tells me every vertical in the world is recognizing the need for the advanced security that we provide. >> mark, i want to thank you. i also want to thank you for putting cybersecurity for dummies which i downloaded last night, i know what a persistent threat is. your stock's going to go higher eventually. mark mclaughin terrific you came on the show. >> nice to be here. >> shares of best buy up more than 3%. courtney reagan just off the phone with the ceo. >> good morning to you. for the fourth quarter, best buy posted impressive earnings beat. revenue did come in below expectations. the ceo tells me the retailer executed its holiday strategy well and explained that going forward best buy will use more science for promotions. when best buy spoke to me on the phone, the basic strategy to be price competitive is the key thing, is not to follow every rat into every rat hole, he said that verbatim we'll be more organized, using more information to develop an
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appropriate response to price competition. when it comes to expectations for the apple watch, which we know is expected to launch in the spring until we know something, it's hard to bank on. until the industry has information about the quality, capabilities, pricing, we're going to have to be cautious. but, quote i want to be one of the first buyers when it does come out. also q4 plan of bringing more inventory forward worked well to work around the west port coast slowdown and expects no major impact on q1 performance as a part of the strategy. when it comes to u.s. consumer joly says our consumer is in better shape than many other consumers around the world. most of the revenue does come from the u.s. you know best buy is an international retailer. back to you. >> thank you. courtney reagan. "stop trading" with jim in a moment. dow giving some back today, down almost 90 points. we'll be right back. at ally bank no branches equals great rates. it's a fact. kind of like mute buttons equal danger. ...that sound good?
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and tears in my eyes. and so many little things that we learned were really the biggest things. through it all, we saved and had a retirement plan. and someone who listened and helped us along the way. because we always knew that someday the future would be the present. every someday needs a plan. talk with us about your retirement today. time for cramer and "stop trading." >> don't take this wrong, goldman is unkind to mankind. they're negative on mankind. but it's the drug company, mnkd from the namesake alfred man, the uptake on the new drug that
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they have is not good and that therefore the company could go much lower and i point out that one of the things that this is a very big retail name and this is a very unkind piece about the inhaler. you know i didn't -- it's a problematic situation is the way i want to put it. raised eyebrows. >> interesting. >> so negative it's a sell. hate mannkind. >> to serve man. >> that, i remember. >> it's a cookbook. >> that freak me out. >> that was that book of recipes that you gave to me on my birthday. no thank you. >> tonight, dine equity five-year chart, 300% gain. >> dine equity remarkable story. julia stewart does not get her due, she will get it tonight. true car disappointed stack went down, bounced back. new storey. i viewer called what about the true car? i said let me reach out to the
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ceo. ihop and applebee's a great story. what looked to be a busted lbo. or at buffett said prif equity. >> private debt. >> yes. >> a good letter. >> it's about equity -- little equity. >> i binged on "house of cards." >> episode eight. piper's gene munster on the apple watch.
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♪ good morning. wac back to "squawk on the street." i'm carl quintanilla with simon hobbs, david faber at post 9 of the new york stock exchange. sara eisen at the nasdaq which hit a milestone, closing above 5000 for the first time in 15 years. we are giving some of it back. the dow is off almost 90 points. everyone, though watching the nasdaq this morning. sara is there. good morning to you. >> good morning to you, guys. as you are saying carl nasdaq backing off from the 5000 level
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this morning. everyone's saying this time is different, it's not 2000. the cover of the usa today, this is not your father's nasdaq, we're not in a tech bubble ala 2000. but what about the similarities? valuations, if you look at price-to-earnings ratio of the nasdaq 100, the chart where we're nowhere near where we were 15 years ago but stocks are more expensive than their historical average. also more expensive than the s&p 500's valuation. apple up 70% in the last 12. you have names like twitter, tesla, netflix trading more than 100 times earnings estimate. carl and simon and david, it's worth asking is the nasdaq pricey? a different angle on the fact that everyone this morning is reporting that this time is indeed different. >> it's got a lot of people talking. live coverage from the nasdaq throughout the morning. let's get to our road map for
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the next 60 minutes. best buy beating estimates. hear what the ceo had to say about the holiday quart. >> is uber killing the traditional taxi industry in the ceo of the new york taxi and limousine commission will join us live. and the israeli prime minister in washington for a meeting that has caused a lot of controversy. we'll talk to the former white house middle east policy adviser as the israeli prime minister prepares to address congress. piper's gene munster thinks the average selling price for the apple watch could be higher than we originally thought. he'll join us live. so u.s. markets pull back from record highs. let's get analysis. ethan harris co-head of global economics research steve masoka joins us. good morning. >> good morning. >> good morning. >> steve a lot of people are looking at nasdaq 5000 and asking very interesting
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questions. this comes from deutsche bank. why did it take just 15 years to make the nasdaq whole after the dotcom crash when it took 10 years more 25 more quarter of the century to make the s&p whole after the great depression? why is it so much shorter now? >> well, a couple of reasons. number one, is i think that the way inflation is higher than it was back then. on a nominal basis, it's reached the peak. but on a real pricing basis it maybe has not. secondly, i think the peak in prices in the economy and the peak in prices was far more robust this time around than it was during say, '30s and '40s. we had very aggressive action by central banks worldwide where we didn't have that back in the '30 and '40s as well. >> it's interesting you should end on that steve. that's the point that the deutsche bank picks up and says
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actually for 15 or 20 years we've been in a policy supercycle, rolling bubbles no bubble's allowed to fully deflate, equities finance, housing, credit and private debt. and that's why we are where we are. point to the sovereign debt market and say, hey, look at the big bubble we have there now, would you agree? >> well yeah i agree but at what point is the stop in do we continue to print money ad nauseam? we've been printing a lot of money and don't see signs of inflation. we continue to see signs of deflation. it's flummoxed many. at some point you think they will develop but there's zero sign now. >> let me jump in on this? >> yeah. >> this idea that we're in serial bubbles is grossly exaggerated. what the fed and other central banks have been doing is holding down interest rates at very low levels and it's allowing balance
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sheet repair. if you look at what people are doing with the money, low grade companies have reinvested and termed out their debt at very low interest rates. household sectors termed outite debt at low interest rates. there's balance sheet healing coming with this boom in the bond market. i don't view this as a bubble. this is nothing like the tech bubble where money was flowing into unprofitable companies. this money that's going into balance sheet repair. so the serial bubble story, i really think, is exaggerated. >> ethan, i know the market analysis and valuations is outside your core economics. but, look janet yellen mentioned it in testimony or at least in written testimony earlier about the elevated biotech valuations. don't you see pockets of excess? it may not be the 2000 bubble but, as i mentioned earlier, you are seeing 100-plus valuations on some stocks and seeing allure for some of the companies? >> yeah there are pockets of
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bubble in both equity market and the credit markets. so clearly there's some excesses out there. that always happens when you have a long expansion with very accommodative monetary policy. broadly speaking i don't think the markets are overvalued. i think we're in a world where growth is improving. the fed has made it clear they're going to exit gently and so they're sending positive message to the markets. and so i think the overall equity market is valued reasonably given the economic and policy backdrop. so ethan -- >> i agree -- >> let me just pick up. you push back hard on the idea of a bubble in the bond market. are you saying that people will get their money back on treasuries or even european debt as things stan at the moment and won't be eroded by inflation, ethan? are we correctly pricing here. >> i think that people are going to get very low returns on these bonds. so i think there's a difference between a bubble where it blows up and companies go out of
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business versus people just getting poor returns. i'm very locked into put my money into the bond market myself right now. i think that the returns aren't high enough. i'd rather be in cash or in the equity market. so is it a bubble that's about to burst and bring the economy down with it? not at all. some of the low value -- some of the low interest rates is a reflection of a world of extremely low inflation. so it's not quite as bubbly as some people suggest. >> steve, do you want to come back? >> yeah. i just want to say, i don't think there's a bubble in the equity markets either with the s&p at 17 times and the nasdaq at 20 times, they're not cheap but they're not overly expensive. there is a bubble brew in fixed income markets. i don't think ten-year german debt at .1% is a very good buy. i don't know who's buying all of the paper but there's a tremendous interest rate risk. >> u.s. ten-year at below 2% whoever's buying that, i think, will be very unhappy with that purchase four to five years from
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now. the bubble exists in the fixed income market and it exists in the sovereign debt market. >> we'll leave it there. guys, thank you for your time. >> thank you. when we come back best buy topping earnings estimates this morning, unveiling plans to buy back shares. the first time we've seen that since 2012. but weakness in tablets still hurting the retailer. what did best buy ceo have to say about the holiday quarter? we'll get you breaking headlines on that when "squawk on the street" comes right back.
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♪ ♪ ♪ i think i did it again♪ >> all-time highs yesterday on the dow, on the s&p, on the russell. of course the nasdaq closing above 5000 yesterday. giving some of that back today, auto sales have been a dis disappointment here in the states at least. ford came in at minus 1.9. estimate positive 5.2 as it was too cold and/or snowy for people to go out on car lots in great volume. downgrades of retail names. keep our eye on various sectors. utilities now in correction territory. they were all-time highs at the end of january. seems like yesterday. >> big move. >> as rate picks are changed people move money around.
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>> the ten-year yield coming up during february, conversely also the treasury sold off very, very strong rally in the equity market. in the hiatus between that rally and the employment report on friday which many take cues where to go next. >> people worried about weather. >> also a factor. >> the port issue. the goldman downgrade specialty retail names arguing that the ports and weather might impact inventory all the way through east, one reason they took pvh down from neutral from conviction buy. will uber be the end of the traditional taxi? prices have plummeted in the last couple of years. how can the yellow cabs compete? the ceo of nyc's taxi and limousine commission will join us live at post 9.
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down market but best buy shares up a percent. revenue falling short of estimates. courtney reagan got a chance to catch up with ceo joly joins us hq with some of the highlights. >> best buy ceo joly if a good mood when i spoke to him after the retailer turned in earnings beating the gotthbottom line. executed holiday strategy well and explained going forward, it going to use more science for promotions. when i asked what that means he says basic strategy of course is to remain price competitive but, quote, key thing not to follow every rat into every rat hole. we plan to be more organized, disciplined, using more information to develop an appropriate response to price promotions. expectations for the apple watch, expected to be launched in the spring but he doesn't know anymore than we do. until we know something, it's hard to bank on it.
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until the industry has information about the price, best buy has to remain cautious. but, quote, i might be the first buyer when it cops comes on fourth quarter worked well to work around the west coast port slowdown and best buy doesn't expect any major impact on first quarter performance as a result of the backlog. when it comes to the consumer the country's consumer in better shape than many consumers around the world. and he spoke about tablets and multiple times in the press release saying et a cycle that has sort of run its course for better or worse. it peaked early, but then it sort of tapered out because the new innovations weren't really that materially different than the innovation from the cycle before. >> tablets and international, still the weak spots. valuable comments. thank you. shares of best buy, as i mentioned, up more than 1% at this hour. joining us to discuss what you should be doing with the stock,
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ubs retail analyst michael lasser. you have a neutral on the stock expecting it to go to $40. you mouftust have been impressed with the comps or cash return. >> the cash return like you said doing it through combination of 51 cent special dividend, buy back $1 billion of stock over the next three years and increased dividend by over 20%. so that's all good news. also told us that while they do expect their margin to be down anywhere from 30 to 50 basis points in the first half of the year, most of that is going to come from sg&a investments which should be good news because it suggests their gross margin is starting to balance out. those are good points. however, stocks had a run in -- it's still a very competitive business. so we think that some of the favorable attributes are balanced with the competitive nature of -- >> is that the problem, michael,
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if you're a long-term investor and best buy, you have to wonder where growth is going to come from. it's doing a phenomenal job on cost cuts and boosting dividend and buybacks is a good thing in the short term but long term where does that position this company for sales growth? >> yeah i think that's right. you've got -- not only do you question where the top line's going to come from but also the sustainability of the margin performance, with all of that being said they are producing a fair amount of free cash flow and returning that. but in and of itself that's not going to lead to outperformance for the shares. what will lead to better performance for the stock is suitable combination of both top line and bottom line. >> i mean michael, what is the bigger picture here? if joly did his job well is there a prospect of winner takes all or are you continually going to be in this position where when it comes to the holiday
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season, consumer electronics are the first thing that everybody stocks up on almost regardless of what area of retail they're in, and then sells it at cost or above cost in order to basically boost the volume of the sales going through the stores and trying to get to sell the core snerd it seem merd? or an environment of amazon, if bezos starts to move the needle you can wipe out a lot of the profitability. >> a lost goodt of good points. first and foremost they're the 800-pound gorilla in this industry. that means that they can only -- they've already gotten as good as it's going to get from an industry positioning perspective. but this is a tough, tough sector in that other retailers, whether it's walmart, target amazon are using consumer electronics, largely as a traffic driver over the holidays they'll put tv notebook computer on sale drive traffic through the store with
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the expectation they'll sell other thing to that consumer. since best buy only traffics in those products it needs to be very analytical in how it promotes but it's subject to a competitive environment. >> what about new product innovations? you heard courtney talking to the ceo about the new apple watch. is that enough to move the needle on sales? we saw how much of an impact new, exciting products can have on the camps picture at best buy. >> i would characterize the current portfolio of products as decent. we've got some emerging technology in the television space, wearables are becoming a valuable category. this is mobile phones continue to be a driver. this is offset by as you mentioned, some slowdown in a decline in tablets and mixed results in gaming. from here there's always the question of what's the next big thing now. we do think that the near-term outlook is going to be consistent with their guidance where it's going to be flat to
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slightly down. it's too early to call the holiday of 2015. and so we'll take a wait and see approach. i think that's the way the market's going to look at it as well. >> we'll leave it there. senior retail analyst at ubs. carl? >> thanks. here's a question is uber crushing the taxi industry? according to figures compiled from new york taxi and limousine commission data the average price of a medallion hit a high hoff 1.3 million in april 2013. since plummeted by nearly a quarter of its val up is the dominance of uber and sharing economy depleting yellow cab market share, or are there other factors? joining us new york city's taxi and limousine commission, ceo and chair. talking about the chart, my question was why the run-up in the first place? what happened back then? >> an incredible increase over 200% of the medallion value believed between 2004 and 2012
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and tlc in the city doesn't get in the business of valuing, that's we leave to the men and women on this floor. but clearly people were looking at comparable sales. as each comparable sale went up it appears the next transfer also went up. >> do you think that was a response to i don't know macro economic factors, gentrification areas of brooklyn? could be a number of things. >> a number of things. it's a small market. the men and women that sell and buy medallions. and there's not a ton of transactions, not high volume but a period where there's increased residence and tourism and increased taxi usage. obviously the popularity of the taxi was self-evident. >> so is uber to blame for the downfall? >> you know, i wouldn't call it a downfall. people in new york love to hail they do it hundreds and thousands of time every year.
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even in -- if you look to me one of the greatest examples of that is recently in the green taxis, they began in april 2013 they -- their beginnings simultaneous with uber's real growth in new york city. during that time at the end of december 2013 on average people were hailing green taxis at 19,000 a day. and today, at the end of december 2014 they're haling them at 50,000 a day. it proves to me there's definitely a large market ub be uber is in addition because they're popular in their customer service is well regarded. >> i'm fascinated why and how you're laying it out like this. i think the bones of what you're saying come fromremarks -- we're coming off an environment in which the last mayor allegedly said before he left office that he would and used the
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four-letter expletive, destroy the yellow cab industry. in an environment where it's said that bloomberg and others are investing in uber and other competitors may feel to be on the defensive. you may feel you have to create a legal standpoint look we're doing all that we can to ensure that the yellow cab has a future. >> well, go back to what i earlier said, we don't actually address valuation of the medallion but we do address and have a responsibility to make sure there's a publicly a lyly available halable system one that the public can use whether or not they have a credit card or set up a smartphone account. that is something that this tlc and administration is focused on ensuring especially since we've made a mandate for 50% accessibility, that's an accessible public system. >> ho do you see it shaking out over time in terms of those who
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choose not to saketake the subway or bus or walk but want to get somewhere using a car? what's the percentage of those going to use one of the services, as opposed to traditional yellow cab? >> we'll see some shifting. i think that the core and the majority of people will still choose hand haling but a segment of the population will rely on smartphones to get aren't whether black car or lux limo. we'll see more market entrance. what uber does lyft bandwagon does, what they do is not patented. it's a new way of communication, it's an empathetic way thinking about what the consumer wants, what the driver wants. >> do you anticipate legal action from the medallion owners who must be spitting blood that they've lost so much money. >> possibly. i was the former general, i experienced being sued several
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times by the industry so it wouldn't surprise me if it happened again. likely i could be sued by uber as well because they dislike a regulatory action that's tlc takes. it's a common reaction to regulation. >> bottom line, would you say the city's better off with uber than without it? >> yes the city's better off. it's provided a level of competition that i think will increase service for the entire city. >> how many years until self-driving taxis in new york city? >> many many. >> many many? >> yes. >> 15 20 50? >> 50. let's go with 50. >> i want you -- >> you need to do long-term planning. >> if they keep raising subway fares. >> always good to have you. >> thank you. >> straight ahead on the program, israeli prime minister netanyahu in washington in d.c. for thecontroversial speech to congress what happen does he hope to accomplish? we'll talk to the former white
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now with the xfinity tv go app, you can watch live tv anytime. it's never been easier with so many networks all in one place. get live tv whenever you want. the xfinity tv go app. now with live tv on the go. enjoy over wifi or on verizon wireless 4g lte. plus enjoy special savings when you purchase any new verizon wireless smartphone or tablet from comcast. visit comcast.com/wireless to learn more. good morning everyone. i'm sue herera. house speaker john boehner says the house will vote on a year-long bill to fund homeland security without immigration conditions. there is a friday deadline on the funding of the agency. the supreme court will take up a second major case targeting president obama's health care law on wednesday. when it considers a conservative
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challenge to the tax subsidies critical to the measure's implementation. a ruling due by june. witnesses telling reuters an iranian military commander is overseeing part of the operation. offensive slowed because of bombs and snipers. and thousands of mourners including a number of ambassadors came to pay their respects to slain russian opposition leader boris net sov in moscow. shot to death walking with a u krin krin ukrainian woman on friday. that is your cnbc update. back to you guys. thanks sue. welcome back to "squawk on the street." within the next 30 minutes israeli prime minister netanyahu will deliver a speech before the joint house of congress. boehner is threatening to strain
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relations between the obama administrations and israel. now, two weeks from its general election. joining us now from washington, the former white house middle east policy adviser, ambassador mark ginsburg. good morning to you. >> good morning. >> how wise do you think it would be for mr. netanyahu within the next 30 minutes to lay bare the nature of the negotiations under way with iran. >> depends who you want to help. do you want to help your cause for re-election cause back in israel or do you want to destroy the administration's efforts to try to forge an agreement at the last minute in geneva? that's really what his objectives respect he is the proverbial skunk at the obama administration's iran picnic. what he -- what the administration is deeply concerned about is that he's going to cherry pick details from the negotiations in order to galvanize a blocking majority in the congress to oppose any lifting of sanctions and/or to try to force legislation through that would require any agreement
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be submitted to congressional approval. >> at the same time clearly, house speaker boehner invited him here for the gop. presumably, republicans feel extremely strongly about this issue who believe it is in their interests interests and israel's interests, if a wedge has to be driven, so be it. >> well indeed. in fact that's exactly why this all plays out very neatly politically for the prime minister. although he's leaving on the damage on the floor, the fabric of u.s./israeli relations, remember, he's up for re-election, he's running into a tough race. he sees himself as the churchill of israel. israelis don't see it that way. indeed his speech may not be covered in live time in israel because of the election season. many people see this as merely a big advertising effort on his part in order to up his chances for re-election in israel. >> i think the politics mr. ambassador are a distraction, whether it's local
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israeli politics or here. how do you ultimately see this plague out on the bigger broader, more threatening issue of iran in do you expect prime minister netanyahu to actually sway congress on his side or do you expect the u.s. to continue these negotiations and diplomatic efforts with iran. >> i would dare say there's a significant number of congressmen who are smelling bad deal already, that is emanating from secretary kerry's efforts in geneva. there's no doubt this agreement, whatever if indeed an agreement emerges -- and that remains to be seen -- something would have a huge uphill bat until congress. that's why the administration has already been trying very hard to signal to congress it has no intention to submit any agreement to congress for its approval. and that's really where the interesting political fight is going to be. after in netanyahu leaves if mr. kerry emerges with an agreement, congress is going to have a monumental fight with the
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administration over whether it has a say in the approval of the agreement and/or whether it will use lifting of sanctions as a way of tactically killing it. >> i should point out the pictures here are file pictures mr. netanyahu isn't due actually to appear in public in congress for another 25 minutes or so. the center of what's going on appears to be this question of whether iran sir, should be allowed limited uranium enrichment technologies and there was a provisional agreement among the community that should be allowed. netanyahu stands foursquare behind the idea it should not. is it possible to go back on that, do you think? in that's the problem here. the train has left the station, as far as mr. netanyahu's concerned. the -- he wants to see iran with no nuclear enrichment capability. there's no way to roll the clock back on that anymore. there's deep concern, understandably, what type of enrichment capability iranians
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will have. indeed what toop ofype of ballistic capable. there's no doubt iran poses a threat to israel. israel is in a neighborhood that you know has types of mullahs that want to try it can keep making that representation. they are deeply concerned that if the administration enters into the agreement, it will turn its back and it will be impossible to stop iran afterward. there's no appetite for using military force against iran's nuclear agreement and, frankly, that's the dirty little secret here. the administration keeps saying all options are on the table but we know better there is no options on the table when it comes to the obama administration. >> people talk about whether obama can work with netanyahu or he can work with obama, if he wins the next general election what happen about the military aspect? is there an environment in which israel would ever launch unilateral action on iran and would that be successful? can the united states stop that
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physically? do they have technology to succeed when in what would be their aim to get a zero nuclear activity there. >> we've played this scenario out where the prime minister picks up the phone at 3:00 a.m. and calls the white house and says to the president, mr. president, the israeli planes are on the way to bomb iran's nuclear weapons. are you with us or against us? and the question is going to be is it mr. obama who receives this call or is it going to be his or her successor who receives that call? that's the question because in the united states a war with iran over its nuclear weapons is one thing. in israel it's an entirely different thing because it doesn't have the military capability to knock iran's nuclear program off the face of the earth. >> ambassador, thank you for your time. ambassador mark ginsburg as we await netanyahu in the next 10 or 15 minutes. next details, we've got details on the apple watch but
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one analyst saying the average sales price could be much higher than people think. what will higher selling prices for the apple watch mean for apple stock? gene munster will weigh in on that when "squawk on the street" comes back. we are live from the nasdaq the morning after the 5000 milestone. we'll be right back. so what's going on today? news alert! message! email! calendar update! most of us admit to being overwhelmed by information at work. that's why ibm created verse. it uses powerful analytics to uncover hidden patterns in your email, calendars and social feeds. it continuously learns how you work. and helps you prioritize the people and projects you need to focus on. there's a new way to work and it's made with ibm.
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♪ down 74 points on the dow. take a look at health care sector, trading lower this morning. dom chu has more. >> it is the worst performing sector in the s&p 500 today. health care stocks taking a hit. the worst performer in mylan, down 3% after a mixed earnings
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record and guidance that was disappointing. a couple of biopharmaceutical stocks also weaker on the spectrum today. shares of celgene and alexion lower. perrigo lower as well. despite the declines sector the third-best performer of the year in 2015 up 5% year to date. back over to you. >> that's help for for the nasdaq as well. the morning after the nasdaq closed above 5000 all eyes on penalty, one-tenth of the index. tech watchers believe apple's entry-level watch could cost $350 but one analyst thinks consumers will end up paying more than that. piper jaffray's gene munster out with a new note everyone's talking about the average sales price of the apple watch joins us now. i have to ask you, here at the nasdaq watching the 5000 level, everyone and their mother says we're not in 2000 but does the
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index look expensive especially as you look at how much is comprised of apple? >> if you look in cot conntext, the earnings power are very different. back in 2000 on the hope of the internet and the substance of the companies is more real. so i feel like you know, most basic level, if the companies have opportunity to grow and i think apple has a golden tune to continue eye growth rate i think it's not expenseiveexpensive. >> people point to the watch as 350, you're look into the high 500 for the average selling price. how did you get at that figure? >> well basically we looked at the band side of this. i think that apple's going to approach those mark very different than they've approached other entries to market. traditionally apple comes at a market with technology approach. there's time it's a design approach. obviously technology's a big part of it and that's some of the selling to it but they're more focussed on the design
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piece. the reason that's important the bands, accessories, ultimately the higher margin products, vogue, for example is highlighting 15 pages to the apple watch this month's issue. so, that aspect of it i think, is greatly underappreciated by investors. i think a lot of investors are going into next week's event with the same game plan this is a feature kind of announcement. i think they're going to talk about higher end bands and higher a.s.p.s. >> you get an average price of 550 to 575. you mentioned monday's big event. the big question, i think, looming over the watch is consumer interest. how do you gauge that? >> i was listening to jim and dave talk about it. jim's going to get it. the fashion idea of the apple watching why do people need this? do you have a sense they are going to buy it. >> 10,000 in the u.s. over the past year surveyed interest level is low. it's 7% of iphone owners in the u.s. said they're going to buy a
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watch. compared to the ipad when it came out, closer to 30%. to answer your question why are people going to want to buy this? that's the second part of the event monday showing more apps more reasons. most people think this is an extension of the cell phone and there's no reason to have the watch. but if apple can go out and show apps, for example, there's a wikipedia app that will tell you points of interest around you automatically, if there's things like that that can get consumers excited, that's going to change the sales tra jexry zs tra jexry over the watch. >> can they sell a high margin product from the carriers. >> i think they company if they're successful at pulling this off as a designer watch and understand that you can't use a watch for rest of your life but ultimately they can pull that off and be successful in the hire end if they can brand themselves around that designer watch category. >> so let's talk about, gene what it means for the stock. is this enough of a catalyst
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after the blowout numbers on the iphone 6 and 6 plus? >> it's going to be a small cal lift. if i was going to put it in the grand scheme of things it should react positive as it ships and investors naturally are going to get optimistic about. that probably has handimpact on the multiple. add 6% to earnings. all of that's good. the substance of the stock is going to be about how the iphone does weep think think there's an opportunity over the next four quarters to be significantly higher than the street. >> does that get us to the 160 price target? >> we don't need blowout up ins to get there. if they do slightly better than the street but if you assume that apple maintains a market share higher than they have historically, because they have the screen size that competes better in the market the numbers get crazy. just because 1.5, 1.8 billion smartphones in the world.
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for people who believe the large numbers is difficult for apple, if you start playing around wit market share numbers you can get to a higher price target. >> the new samsung, getting some decent reviews. thank you for weighing in for now. valuable on apple. gene munster of piper jaffray. nasdaq down .6%. >> auto sales continue to come in, most not good. phil lebeau has toyota. >> once again, we have another automaker falling shy of expectations when it comes to february sales. toyota increase of 13.3% last month. the edmundness.com estimate for increase of 16%. it is clear automakers and we haven't heard from toyota yet, but many automakerers citing the fact of storms, particularly the northeast, weighing on sales. during the ford sales call going on now, one of the executives say they saw a slowdown in sales in the last month of february. how much of that is weather related, unclear at this point.
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but clearly, we're going to see february sales, carl coming in shy of what many expected. i would say probably down in that 16.3 16.4 million range, compared to the estimate of 16.7. back to you. >> phil thank you very much. washington for a quick look here at the capitol, as israeli prime minister netanyahu set to address a joint meeting of congress in a few moments. discussion of whether or not the iranians will come around to any nuclear deal. but also the precedent of having someone of netanyahu's stature address congress without the clearance of the white house. when that begins we'll bring you a taste of it live. dow down 76 points and comp giving back 20 points. a live shot of the gal rip house speaker boehner saying that although many congress people are not going to the speech particularly from the democratic side that he's had ten times the number of requests for tickets than there are seats in the gallery.
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so republicans trying to push forward the message this is a much sought after event. >> democrats pointing out two weeks before the israeli general election. let's hear from house speaker boehner. let's not do that. is john harwood available? a lot of people carl talking about the politicization of the security of israel. and i think one-fifth of democrats were planning not to attend today. it is obviously extremely controversial. >> interesting take this morning, looking at the precedent for this kind of thing. other world leaders that have addressed congress in the past, boris yeltsin, nelson mandela, cora zone aquino margaret thatcher. it's not like this has never happened before but this is obviously comes wrapped in a bunch of political enigmas. john, your thoughts on this as we watch the prime minister
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begin to enter the room? >> reporter: i think, carl it's a dramatic moment. talking about a situation where israel is a staunch ally of the united states the united states was the first country recognize the state of israel when it was created after world war ii 11 minutes after it declared independence bipartisan support and yet a situation just before his election the israeli prime minister is coming at the invitation of the president of the united states political ader are sairries in congress to make a speech opposing the president's policy his pursuit of the nuclear deal with iran. that is something extremely unusual. i don't -- i can't remember having seen a circumstance that's parallel so there's drama in that drama in what the prime minister's mess am is going to be and as we saw from his speech yesterday, he is expressing the exoistential fear residents of israel feel the united states
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cannot feel because of how the united states is situated and power in the world so there are different perspectives and the president last night in an interview with reuters said the prime minister has been wrong in his skepticism about the deal his belief that it was going to reward iran that iran wasn't going to follow the deal so these guys are playing for very high stakes and the prime minister's message shouldgoing to be boycotted by about 50 democratic members of congress is one that probably cannot derails the talks but as president obama said in the speech yesterday the talks are less than 50/50 to succeed anyway. this is a big moment. >> john "the jerusalem post" calls this the address of his career referring to prime minister netanyahu and what we are about to see. how will it be measured? how will it be received? will it be with action with lobbying, just congressional
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reaction? what shall we be looking for after this? >> well i think lobbying is the most important thing because he's trying to influence opinion in congress and american public opinion as well as the president tries to conclude this deal. but really the impact of it is only going to be felt if, in fact the deal is reached and then you have the question of what is the tide of sentiment politically for or against that deal? and i think that's when we're going to know whether it was successful or not and also we're going to have an interim sense of that when the elections occur in israel in a couple weeks. >> but hang on a minute, john. if mr. netanyahu is going to lay out the bones whatever he believes to be the through the pressure from other forces. >> that's possible.
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and the administration has expressed concern that sensitive information might be leased. i would be surprised if prime minister netanyahu does release information that is so sensitive that it would derail the talks. you have to see that as a possibility. i think in terms of derailing the talks by the speech taking place, the rest of the world this will be discounted as a political maneuver and the administration has encouraged that belief and the democrats boycotting the speech has encouraged that believe in an attempt to minimize the capacity of the speech to derail those negotiations. >> okay. let's take a quick break. john harwood, thank you, as we await the israeli prime minister addressing both houses of congress.
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now with the xfinity tv go app, you can watch live tv anytime. it's never been easier with so many networks all in one place. get live tv whenever you want. the xfinity tv go app. now with live tv on the go. enjoy over wifi or on verizon wireless 4g lte. plus enjoy special savings when you purchase any new verizon wireless smartphone or tablet from comcast. visit comcast.com/wireless to learn more. . live shot of the capitol hill where israeli prime minister benjamin netanyahu is set to speak in a few moments
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having a lot of discussions about the political questions this morning. there's steny hoyer. "washington post" is reporting that about 50 lawmakers are not in attendance including about eight, elizabeth warren patrick leahy, among others, although according to the "washington post" some well-known republican backers, sheldon adelson is in attendance attendance, bob kraft of the new england patriots john harwood, do you expect fireworks on this? we should note the white house at 11:30 is going to hold their own video conence from with leaders from the uk france germany and the eurozone on this. >> yeah. little counter programming there, carl. i wouldn't expect fireworks from the speech. i think the fireworks are the fact that the invitation was made extended and accepted and the speech is being made. i would expect prime minister netanyahu to try as he did yesterday and to some degree the president did, to minimize the sense of personal antagonism and
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strain in the u.s./israeli relationship. the president said yesterday, even though susan rice national security adviser, said prime minister netanyahu's decision to come here had been destructive under the circumstances, president said it's not permanently destructive and i would expect prime minister netanyahu, given the criticism he's received including some at home in israel, is going to try to tamp that down while making a forcefuls case against this deal and explaining why. >> let's take a listen to the house speaker. >> forest rogers. gentleman from oregon mr. walden gentleman from indiana mr. messer general lady from kansas, miss jenkins the gentle woman from north carolina miss fox, gentleman from california mr. royce, gentle woman from florida miss ros-lehtinen gentle woman from texas miss granger, from new york mr. zeldin. gentleman from maryland mr. hoyer, gentle manuel from new
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york, mr. crowley, from new york mr. israel gentleman from new york mr. engel, gentle woman from new york, miss louie, gentleman from new york mr. adler. >> obviously a roll call going on john. nbc news is reporting that the iranian foreign minister was caught up by reporters a moment ago and was asked about whether or not this speech would impact the nuclear talks. he answered, quote, well, he's trying to, but i don't think trying to create tension and conflict helps anyone. john? >> again, as we talked about a few moments ago, i think the talks and the quest at the last minute to get a deal after the negotiations has gone on so long to the likely to be derailed by this speech. it certainly injects a note of tension and pressure but i think that the deal is going to rise or fall on iran's willingness or lack of willingness to go along with
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some of the conditions that the united states and the other negotiating partners have set about preventing breakout capacity within a year stopping short of being in a position to produce a weapon a year after the agreement is either expired or violated. that's key. the president said yesterday it needs to be double digit years in agreement and i think all of those substantive factors will be what determines whether it happens or doesn't. >> question john harwood, as we watch this joint session, about something that prime minister netanyahu said to apac yesterday. he said israel has never been a bipartisan issue in this country. that we support israel on both sides. is there a risk that it will now be one? >> i don't think a lasting risk. it is a momentary problem and certainly the two sides are divided on -- the two

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